FINANCIAL REPORT f ) Impairment The carrying values of property , plant and equipment are reviewed for impairment at each reporting date , with the recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired .
The recoverable amount of property , plant and equipment is the higher of fair value less costs to sell and value in use . Depreciated replacement cost is used to determine value in use . Depreciated replacement cost is the current replacement cost of an item of plant and equipment less , where applicable , accumulated depreciation to date , calculated on the basis of such cost .
g ) Leases The Company assesses whether a contract is or contains a lease , at inception of the contract . The Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee , except for short-term leases ( defined as leases with a lease term of 12 months or less ) and leases of low value assets ( such as tablets and personal computers , small items of office furniture and telephones ). For these leases , the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed .
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date , discounted by using the rate implicit in the lease . If this rate cannot be readily determined , the Company uses its incremental borrowing rate .
Lease payments included in the measurement of the lease liability comprise :
• Fixed lease payments ( including in-substance fixed payments ), less any lease incentives receivable .
• Variable lease payments that depend on an index or rate , initially measured using the index or rate at the commencement date .
The lease liability is presented as a separate line in the Consolidated Statement of Financial Position .
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability ( using the effective interest method ) and by reducing the carrying amount to reflect the lease payments made .
The right-of-use assets comprise the initial measurement of the corresponding lease liability , lease payments made at or before the commencement day , less any lease incentives received and any initial direct costs . They are subsequently measured at cost less accumulated depreciation and impairment losses .
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset . If a lease transfers ownership of the underlying asset or the cost of the right-ofuse asset reflects that the Company expects to exercise a purchase option , the related right-ofuse asset is depreciated over the useful life of the underlying asset . The depreciation starts at the commencement date of the lease .
The right-of-use assets are presented as a separate line in the Consolidated Statement of Financial Position .
The Company applies AASB 136 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the ‘ Property , Plant and Equipment ’ policy .
For the concessionary leases , the Company applies the temporary option under AASB 2018-8 to measure the right-of-use-assets at cost on initial recognition .
h ) Revenue recognition The Company recognises income from its main revenue / income streams , as listed below :
• Government grants
• Donations
• Capital grants
• Parent fees
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